I 

114TH CONGRESS 

1ST SESSION H. R. 4293 

To amend the Employee Retirement Income Security Act of 1974 to ensure 

that retirement investors receive advice in their best interests, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 18, 2015 

Mr. ROE of Tennessee (for himself, Mr. NEAL, Mr. ROSKAM, Mr. LARSON of 

Connecticut, Mr. CARTER of Georgia, and Mr. DAVID SCOTT of Georgia) 

introduced the following bill; which was referred to the Committee on 

Education and the Workforce 

A BILL 

To amend the Employee Retirement Income Security Act 

of 1974 to ensure that retirement investors receive advice 

in their best interests, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Affordable Retirement 

5 Advice Protection Act’’. 

6 SEC. 2. PURPOSE. 

7 The purpose of this Act is to provide that advisors 

8 who— 


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1 (1) provide advice that is impermissible under 

2 the prohibited transaction provisions under section 

3 406 of the Employee Retirement Income Security 

4 Act of 1974, or 

5 (2) breach the best interest standard for the 

6 provision of investment advice, 

7 are subject to liability under the Employee Retirement In8 come Security Act of 1974. 

9 SEC. 3. RULES RELATING TO THE PROVISION OF INVEST10 MENT ADVICE. 

11 (a) AMENDMENTS TO THE EMPLOYEE RETIREMENT

12 INCOME SECURITY ACT OF 1974.— 

13 (1) DEFINITION OF INVESTMENT ADVICE.— 

14 Section 3(21) of the Employee Retirement Income 

15 Security Act of 1974 (29 U.S.C. 1002(21)) is 

16 amended by adding at the end the following: 

17 ‘‘(C)(i) For purposes of clause (ii) of subparagraph 

18 (A), the term ‘investment advice’ means a recommenda19 tion that— 

20 ‘‘(I) relates to— 

21 ‘‘(aa) the advisability of acquiring, holding, 

22 disposing, or exchanging any moneys or other 

23 property of a plan by the plan, plan partici24 pants, or plan beneficiaries, including any rec25 ommendation whether to take a distribution of 


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1 benefits from such plan or any recommendation 

2 relating to the investment of any moneys or 

3 other property of such plan to be rolled over or 

4 otherwise distributed from such plan; 

5 ‘‘(bb) the management of moneys or other 

6 property of such plan, including recommenda7 tions relating to the management of moneys or 

8 other property to be rolled over or otherwise 

9 distributed from such plan; or 

10 ‘‘(cc) the advisability of retaining or ceas11 ing to retain a person who would receive a fee 

12 or other compensation for providing any of the 

13 types of advice described in this subclause; and 

14 ‘‘(II) is rendered pursuant to— 

15 ‘‘(aa) a written acknowledgment of the ob16 ligation of the advisor to comply with section 

17 404 with respect to the provision of such rec18 ommendation; or 

19 ‘‘(bb) a mutual agreement, arrangement, 

20 or understanding, which may include limitations 

21 on scope, timing, and responsibility to provide 

22 ongoing monitoring or advice services, between 

23 the person making such recommendation and 

24 the plan that such recommendation is individ25 ualized to the plan and such plan intends to 


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1 materially rely on such recommendation in 

2 making investment or management decisions 

3 with respect to any moneys or other property of 

4 such plan. 

5 ‘‘(ii) For purposes of clause (i)(II)(bb), any dis6 claimer of a mutual agreement, arrangement, or under7 standing shall only state the following: ‘This information 

8 is not individualized to you, and there is no intent for you 

9 to materially rely on this information in making invest10 ment or management decisions.’. Such disclaimer shall not 

11 be effective unless such disclaimer is in writing and is 

12 communicated in a clear and prominent manner and an 

13 objective person would reasonably conclude that, based on 

14 all the facts and circumstances, there was not a mutual 

15 agreement, arrangement, or understanding. 

16 ‘‘(iii) For purposes of clause (i)(II)(bb), information 

17 shall not be considered to be a recommendation made pur18 suant to a mutual agreement, arrangement, or under19 standing, and such information shall contain the dis20 claimer required by clause (ii), if— 

21 ‘‘(I) it is provided in conjunction with full and 

22 fair disclosure in writing to a plan, plan participant, 

23 or beneficiary that the person providing the informa24 tion is doing so in its marketing or sales capacity, 

25 including any information regarding the terms and 


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1 conditions of the engagement of the person providing 

2 the information, and that the person is not intending 

3 to provide investment advice within the meaning of 

4 this subparagraph or to otherwise act within and 

5 under the obligations of the best interest standard 

6 as described in this subparagraph; 

7 ‘‘(II) the person providing the information is a 

8 counterparty or service provider to the plan in con9 nection with any transaction based on the informa10 tion (including a service arrangement, sale, pur11 chase, loan, bilateral contract, swap (as defined in 

12 section 1a of the Commodity Exchange Act (7 

13 U.S.C. 1a)), or security-based swap (as defined in 

14 section 3(a) of the Securities Exchange Act (15 

15 U.S.C. 78c(a)))), but only if— 

16 ‘‘(aa) the plan is represented, in connection 

17 with such transaction, by a plan fiduciary who 

18 is independent of the person providing the in19 formation, and, except in the case of a swap or 

20 security-based swap, independent of the plan 

21 sponsor; and 

22 ‘‘(bb) prior to such transaction, the inde23 pendent plan fiduciary represents in writing to 

24 the person providing the information that it is 

25 aware that the person has a financial interest 


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1 in the transaction and that it has determined 

2 that the person is not intending to provide in3 vestment advice within the meaning of this sub4 paragraph or to otherwise act as a fiduciary to 

5 the plan subject to section 404; 

6 ‘‘(III) the person providing the information is 

7 an employee of any sponsoring employer or employee 

8 organization who provides the information to the 

9 plan for no fee or other compensation other than the 

10 employee’s normal compensation; 

11 ‘‘(IV) the person providing the information dis12 closes in writing to the plan fiduciary that the per13 son is not undertaking to provide investment advice 

14 as a fiduciary to the plan subject to section 404 and 

15 the information consists solely of— 

16 ‘‘(aa) making available to the plan, without 

17 regard to the individualized needs of the plan, 

18 securities or other property through a platform 

19 or similar mechanism from which a plan fidu20 ciary may select or monitor investment alter21 natives, including qualified default investment 

22 alternatives, into which plan participants or 

23 beneficiaries may direct the investment of as24 sets held in, or contributed to, their individual 

25 accounts; or 


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1 ‘‘(bb) in connection with a platform or 

2 similar mechanism described in item (aa)— 

3 ‘‘(AA) identifying investment alter4 natives that meet objective criteria speci5 fied by the plan, such as criteria con6 cerning expense ratios, fund sizes, types of 

7 asset, or credit quality; or 

8 ‘‘(BB) providing objective financial 

9 data and comparisons with independent 

10 benchmarks to the plan; 

11 ‘‘(V) the information consists solely of valuation 

12 information; or 

13 ‘‘(VI) the information consists solely of— 

14 ‘‘(aa) information described in Department 

15 of Labor Interpretive Bulletin 96–1 (29 C.F.R. 

16 2509.96–1, as in effect on January 1, 2015), 

17 regardless of whether such education is pro18 vided to a plan or plan fiduciary or a partici19 pant or beneficiary; 

20 ‘‘(bb) information provided to participants 

21 or beneficiaries regarding the factors to con22 sider in deciding whether to elect to receive a 

23 distribution from a plan or an individual retire24 ment plan (as defined in section 7701(a)(37) of 

25 the Internal Revenue Code of 1986) and whethVerDate Sep 11 2014 03:59 Dec 24, 2015 Jkt 059200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4293.IH H4293

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1 er to roll over such distribution to a plan or an 

2 individual retirement plan (as defined in section 

3 7701(a)(37) of the Internal Revenue Code of 

4 1986), so long as any examples of different dis5 tribution and rollover alternatives are accom6 panied by all material facts and assumptions on 

7 which the examples are based; or 

8 ‘‘(cc) any additional information treated as 

9 education by the Secretary.’’. 

10 (2) EXEMPTION RELATING TO INVESTMENT AD11 VICE.—Section 408(b) of the Employee Retirement 

12 Income Security Act of 1974 is amended by adding 

13 at the end the following: 

14 ‘‘(21)(A) Any transaction, including a contract 

15 for service, between a person providing investment 

16 advice described in section 3(21)(A)(ii) and the ad17 vice recipient in connection with such investment ad18 vice, and any transaction consisting of the provision 

19 of such investment advice, if the following conditions 

20 are satisfied: 

21 ‘‘(i) No more than reasonable compensa22 tion is paid (as determined under section 

23 408(b)(2)) for such investment advice. 

24 ‘‘(ii) If the investment advice is based on 

25 a limited range of investment options (which 


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1 may consist, in whole or in part, of proprietary 

2 products), such limitations, including a clearly3 stated notice that the same or similar invest4 ments may be available at a different cost 

5 (greater or lesser) from other sources, shall be 

6 clearly disclosed to the advice recipient prior to 

7 any transaction based on the investment advice. 

8 The notice shall only state the following: ‘The 

9 same or similar investments may be available at 

10 a different cost (greater or lesser) from other 

11 sources.’. 

12 ‘‘(iii) If the investment advice may result 

13 in variable compensation to the person pro14 viding the investment advice (or any affiliate of 

15 such person), the receipt of such compensation, 

16 including a clearly-stated notice that the same 

17 or similar investments may be available at a 

18 different cost (greater or lesser) from other 

19 sources, shall be clearly disclosed to the advice 

20 recipient. The notice shall only state the fol21 lowing: ‘The same or similar investments may 

22 be available at a different cost (greater or less23 er) from other sources.’ For purposes of this 

24 subparagraph, clear disclosure of variable com25 pensation means notification prior to any transVerDate Sep 11 2014 03:59 Dec 24, 2015 Jkt 059200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4293.IH H4293

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1 action based on the recommendation, in a man2 ner calculated to be understood by the average 

3 individual, of the following: 

4 ‘‘(I) A notice that the person pro5 viding the recommendation (or its affiliate) 

6 may receive varying amounts of fees or 

7 other compensation with respect to such 

8 transaction. 

9 ‘‘(II) A description of any fee or other 

10 compensation that is directly payable to 

11 the person (or its affiliate) from the advice 

12 recipient with respect to such transaction 

13 (expressed as an amount, formula, percent14 age of assets, per capita charge, or esti15 mate or range of such compensation). 

16 ‘‘(III) A description of the types and 

17 ranges of any indirect compensation that 

18 may be paid to the person (or its affiliate) 

19 by any third party in connection with such 

20 transaction (expressed as an amount, for21 mula, percentage of assets, per capita 

22 charge, or estimate of such ranges of com23 pensation). 

24 ‘‘(IV) Upon request of the advice re25 cipient, a disclosure of the specific 


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1 amounts of compensation described in 

2 clause (iii) that the person will receive in 

3 connection with the particular transaction 

4 (expressed as an amount, formula, percent5 age of assets, per capita charge, or esti6 mate of such compensation). 

7 ‘‘(B) No recommendation will fail to satisfy the 

8 conditions described in clauses (i) through (iii) of 

9 subparagraph (A) solely because the person, acting 

10 in good faith and with reasonable diligence, makes 

11 an error or omission in disclosing the information 

12 specified in such clauses, provided that the person 

13 discloses the correct information to the advice recipi14 ent as soon as practicable, but not later than 30 

15 days from the date on which the person knows of 

16 such error or omission. 

17 ‘‘(C) For purposes of this paragraph, the term 

18 ‘affiliate’ has the meaning given in subsection 

19 (g)(11)(B).’’. 

20 (b) EFFECTIVE DATE.— 

21 (1) MODIFICATION OF CERTAIN RULES, AND

22 RULES AND ADMINISTRATIVE POSITIONS PROMUL23 GATED BEFORE ENACTMENT BUT NOT EFFECTIVE

24 ON JANUARY 1, 2015, PROHIBITED.—The Depart25 ment of Labor is prohibited from amending any 


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1 rules or administrative positions promulgated under, 

2 or applicable for purposes of, section 3(21) of the 

3 Employee Retirement Income Security Act of 1974 

4 (including Department of Labor Interpretive Bul5 letin 96–1 (29 C.F.R. 2509.96–1) and Department 

6 of Labor Advisory Opinion 2005–23A), and no such 

7 rule or administrative position promulgated by the 

8 Department of Labor prior to the date of the enact9 ment of this Act but not effective on January 1, 

10 2015, may become effective unless a bill or joint res11 olution referred to in paragraph (3) is enacted as de12 scribed in such paragraph not later than 60 days 

13 after the date of the enactment of this Act. 

14 (2) GENERAL EFFECTIVE DATE OF AMEND15 MENTS.—Except as provided in paragraph (3), the 

16 amendments made by subsection (a) of this section 

17 shall take effect on the 61st day after the date of 

18 the enactment of this Act and shall apply with re19 spect to information provided or recommendations 

20 made on or after 2 years after the date of the enact21 ment of this Act. 

22 (3) EXCEPTION.—If a bill or joint resolution is 

23 enacted prior to the 61st day after the date of the 

24 enactment of this Act that specifically approves any 

25 rules or administrative positions promulgated under, 


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1 or applicable for purposes of, section 3(21) of the 

2 Employee Retirement Income Security Act of 1974 

3 that is not in effect on January 1, 2015, the amend4 ments made by subsection (a) of this section shall 

5 not take effect. 

6 (c) GRANDFATHERED TRANSACTIONS AND SERV7 ICES.—The amendments made by subsection (a) shall not 

8 apply to any service or transaction rendered, entered into, 

9 or for which a person has been compensated prior to the 

10 date on which the amendments made by subsection (a) 

11 of this Act become effective under subsection (b)(2). 

12 (d) TRANSITION.—If the amendments made by sub13 section (a) of this section take effect, then nothing in this 

14 section shall be construed to prohibit the issuance of guid15 ance to carry out such amendments so long as such guid16 ance is necessary to implement such amendments. Until 

17 such time as regulations or other guidance are issued to 

18 carry out such amendments, a plan and a fiduciary shall 

19 be treated as meeting the requirements of such amend20 ments if the plan or fiduciary, as the case may be, makes 

21 a good faith effort to comply with such requirements. 

Æ 


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